Many Canadians dream of running their own small businesses thanks to the flexibility and autonomy they bring. However, many people underestimate exactly what goes into running a business, especially on the accounting side. Keeping track of revenues, debts, payroll, and other financial information is crucially important for operating a financially solvent and healthy business. 

As such, it’s almost always in a small business owner’s best interest to hire an accountant. With that in mind, the team at Group Enroll presents these tips on how to find an accountant for small business. We will discuss why you should hire an accountant and how to find the right one for the job.

Does My Business Need an Accountant?

Strictly speaking, there is no law requiring small businesses to have an accountant. Many small businesses, especially sole proprietors, operate without an accountant and personally handle their finances. 

In fact, only about 30% of Canadian small businesses choose to work with an account. However, there are a lot of benefits to hiring an accountant, even for small businesses.

Tax Planning

One of the biggest reasons to hire an accountant is for tax purposes. Accountants can organize financial statements to ensure that you correctly report business income and assets on your tax return. Accountants understand corporate tax compliance rules and can also provide tax-planning strategies to reduce tax liabilities and save your business money.

Budgeting and Cash Flow

An accountant can help you organize your budget and cash flow statements if your business deals with multiple revenue streams. Specifically, accountants can calculate your revenues, debts, and expenses to ensure that you meet financial projections and have enough money to fund continuing operations and pursue growth.

Payroll

Another reason to hire an accountant is to manage payroll and employee expenses. The Canada Revenue Agency (CRA) has very specific employee payroll requirements, and you can get in significant legal trouble if you don’t correctly report payroll expenses. An accountant can ensure that you comply with all reporting requirements.

Advising

Some accountants only perform bookkeeping and tax return duties, while others take a much more involved role in business operations. Professional accountants can also advise you on business matters and help you find the most efficient ways to run your company.

Save Time

Many small business owners end up spending a lot of time doing their own accounting. Hiring a professional can save significant time and resources that you can put towards other business-critical projects.

Accountant vs Bookkeeper

People often use “accountant” and “bookkeeper” interchangeably, but they have different roles and do different things. 

Bookkeepers primarily focus on recording routine transactions like sales and revenue, whereas accountants focus on a top-down view of financials that includes more analysis and extrapolation. 

In other words, bookkeepers take records of finances, and accountants can tell you what those records mean for your business. Accountants might perform some bookkeeping duties, but their core purpose is for higher-level analysis and regulatory compliance.

How to Pick the Right Accountant for Your Business

Below are some categories to consider for how to find an accountant for small businesses.

Review Qualifications

The first thing you should look for in an accountant is relevant qualifications and experience. Any accountant you consider should be a Chartered Professional Accountant (CPA) or equivalent designation and have experience working with businesses close to your size. 

Although not necessary, it is also helpful to pick an accountant that has experience working with businesses in a similar industry as yours. For example, if you run a plumbing firm, try to find an accountant that has worked with plumbers, contractors, or roofers in the past.

Choose Between an Accounting Firm or Employee

Another thing to consider is whether you want to outsource to an accounting firm or hire a dedicated employee. Most small businesses don’t need a full-time in-house accountant, so most owners choose either a firm or an independent contractor. 

One of the benefits of hiring an external firm is they have the resources to handle large accounting projects that individual contractors can’t. However, accounting firms might have several other high-profile clients, so you might feel like your firm isn’t receiving proper attention. 

Independent contractor accountants have fewer resources to work with but are more likely to offer personalized white glove services. Independent contractors tend to provide more flexible and affordable rates than large firms. 

Ultimately, the choice between an accounting firm or a contractor depends on your business size, revenue, and goals. At the end of the day, you want someone who understands your business and who you can work with for many years.

Use Referrals

Many business owners use the internet to search for a business accountant. While you can find many competent and qualified accountants online, the best gauge of ability and reputation is asking colleagues and other business owners for recommendations. Testimonials from friends and family can provide insight into what working with a specific accountant is like.

Fill the Gaps in Your Software Setup

If you do not already use bookkeeping software, an accountant can help you set it up for your business. Accounting software can help you manage minute daily bookkeeping tasks like recording revenue and debt. You can ask a certified accountant to help you set up software packages and provide training. 

Using bookkeeping software saves you the trouble of hiring a bookkeeper and makes records more accessible for accounting purposes.

Look for a Proactive Accountant

A qualified accountant does more than fill out your tax returns. They can also offer high-level financial advice on things like organizational structure, tax strategies, and long-term planning. For example, proactive accounting professionals can help you decide which kind of legal structure is best for your business.

Consider Pricing Structure

Accountants usually charge for services either with a flat fee or by the hour. Hourly fees for CPAs can range from anywhere between $100 to $300. Most small businesses end up paying about $250 per hour for accountant services. 

Accountants might charge a flat fee for basic tax filing services and have a menu with pricing for other services. Some accountants charge a flat fee for integrated tax services.

How to Find an Accountant for Your Small Business: Potential Red Flags

Some accountants may have the right credentials but not be the right person for the job. Be on the lookout for any of the following red flags when searching for an accountant. 

• Be wary of any promises that seem too good to be true. For instance, an accountant might promise a large return before even looking at your taxes. Accountants can’t promise things like that, so they are most likely being dishonest. 
• A major red flag is an accountant who tells you to exaggerate or embellish financial information. A competent accountant can find legal tax breaks and loopholes while using accurate and truthful information. 
• Avoid accountants who charge fees on a sliding scale based on the size of your refund. Stick with professionals who charge a set hourly rate or a flat fee for services. 
• Accountants should never ask to handle company money directly.
• Accountants have to interpret existing tax law to do their jobs, but Canadian law forbids accountants from offering explicit legal advice. If you are not sure about certain legal issues with taxes or finances, speak to a tax attorney. 
• Canadian law requires all certified accountants to hold professional liability insurance in case they make a mistake. If your prospective accountants can’t provide proof of liability insurance, you should look elsewhere. 
• Your accountant should keep you in the loop about finances at all times. They should ask you questions about your business and notify you to check important documents like tax returns. 

Picking a trusted accountant is about more than getting the maximum tax refund. Failing to report revenue can incur harsh financial and legal penalties. A competent accountant can ensure that you maintain regulatory compliance with all financial reporting requirements. The trick to how to find an accountant for a small business is finding someone you can trust.

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